Which of the following statements about the use of direct labor as a cost driver is false?

Multiple Choice

Direct labor is the most commonly used cost driver when calculating a predetermined overhead rate.

Direct labor is gaining importance in many manufacturing applications with respect to being a significant cost driver.

Direct labor is an inappropriate cost driver to use if a company is highly automated.

Direct labor is an inappropriate cost driver to use if a company is highly automated.

If direct labor is good increases in direct labor are matched with increases in manufacturing overhead. Companies can use either direct labor cost or direct labor hours as a cost driver.